Ofwat urges water suppliers to cut costs

Ofwat is urging three water companies to lower some of their wholesale prices as they exceed the watchdog’s recommended pricing model.

The regulator has written to Bristol Water, Thames Water and United Utilities to advise them to reconsider the prices they plan to charge customers for certain services.

Its concerns are focused on the future planned spending on Bristol Water’s wholesale water price control, the proposed separate price control for Thames’ costs related to the Thames Tideway Tunnel and United Utilities’ wholesale wastewater prices.

Source: Ofwat

Ofwat said there is still more than a 20% difference between the companies’ plans and the level of costs it considers to be efficient. It found Thames Water is charging customers more than double its recommended price for the cost of constructing its Thames Tideway Tunnel.

It stated: “This early notification is intended to protect customers by allowing those companies with very material differences time to reconsider their plans in these areas or to provide further compelling evidence in responding to Ofwat’s draft determinations that the costs they are putting forward are efficient so Ofwat can take this into account in its final determinations in December.”

The regulator will issue draft conclusions for all water and wastewater companies at the end of the month.